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A $1,000 par value bond was issued five years ago at a couponrate of 12 percent. It currently has 25 years remaining tomaturity. Interest rates on similar debt obligations are now 14percent. Use Appendix B and Appendix D for an approximate answerbut calculate your final answer using the formula and financialcalculator methods.

a. Compute the current price of the bond usingan assumption of semiannual payments. (Do not roundintermediate calculations and round your answer to 2 decimalplaces.)
  

b. If Mr. Robinson initially bought the bond atpar value, what is his percentage capital gain or loss?(Ignore any interest income received. Do not roundintermediate calculations and input the amount as a positivepercent rounded to 2 decimal places.)
  

  
c. Now assume Mrs. Pinson buys the bond at itscurrent market value and holds it to maturity, what will be herpercentage capital gain or loss? (Ignore any interestincome received. Do not round intermediate calculations and inputthe amount as a positive percent rounded to 2 decimalplaces.)
  

d. Why is the percentage gain larger than thepercentage loss when the same dollar amounts are involved in partsb and c?

	The percentage gain is larger than the percentage loss becausethe investment is larger.
	The percentage gain is larger than the percentage loss becausethe investment is smaller.